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e: i hosed it up, nvm
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Mar 7, 2020 22:02
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Question about mutual funds vs. ETFs. Vanguard offers equivalent products in each form. However, they can have different expense ratios: VBTLX total bond mutual fund, ratio 0.05 == BND total bond etf, ratio 0.035 VSIGX intermediate treasury fund, ratio 0.07 == VGIT intermed treasury etf, ratio 0.05 There's a few other examples but I won't bother listing them all. My question is, why the difference? Why would anyone buy the fund instead of the ETF given the expense ratio spread? Aren't ETFs sometimes more tax-efficient, on top of the ratio advantage? I must be missing something here because I am not a pro like the people who run Vanguard. What's the deal? edit: hmm, maybe transaction costs? buy if you're buying and holding, the lower ratio would win out over time pmchem fucked around with this message at 00:13 on Mar 8, 2020 |
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Mar 7, 2020 23:12
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ETFs are usually more tax efficient than MFs, but Vanguard actually has a patented method that makes them equally tax efficient. Other than that, ETF are usually cheaper and easier to manage than MFs, so management companies will give ETFs lower expense ratios to reflect this / encourage ETF usage. MFs have certain advantages and disadvantages over ETFs, though these differences are diminishing with the advent fractional shares and the like, though some companies don't offer fractional shares (Vanguard is one of them). Ultimately, the difference in expense ratios are relatively minor.
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Mar 8, 2020 00:44
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Duckman2008 posted:How long until you plan on buying a house ? Is it something you definitely want to do? Also, the main disclaimer is make sure not to buy too much house. Start finding a realtor soon, hopefully buy by July/August... I think so man. I want to build equity, to develop my long term financial stability and free up future cash flow. I don’t want to keep looking for a new apartment every year or two. I like fixing things, I like projects, I like yard work., I think I’ll relatively enjoy a number of the “negative” things that come with owning. I want somewhere me and my girlfriend could see starting a family. And, I mean, why keep whittling away at my savings paying rent? If I have the 5+ year line of sight to know I want to stay roughly where I’m at, shouldn’t I start putting that money toward actually owning something? Aren’t these the right reasons? Also, by too much home, do you mean taking on a mortgage with payments disproportionate to our income? That’s the last thing I’d want to do. A primary goal is to lock in a mortgage well within our means (<25% of current net take home) thru a large down payment. As for actually size, I’d like to find like a 3br, 2ba. Enough space for an office and guest room for now, and potentially room to squeeze in some kiddos if that comes along. I do not need a mansion. I just wanna say I really appreciate everyone’s advice.
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Mar 8, 2020 01:09
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Somebody else is gonna do a better job laying everything out but I'll just say that rent/buy is not a simple worse/better thing with regards to your financial picture. Short answer: rent is the most you have to pay and your mortgage is the least you have to pay. I say this as somebody who is closing on their first home in 3 days. The reasons about wanting to own a home because you want a thing that's yours to fix and tweak are good reasons and the same reasons I'm doing it.
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Mar 8, 2020 01:58
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Hoodwinker posted:I say this as somebody who is closing on their first home in 3 days. 
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Mar 8, 2020 02:01
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Getting broken heating fixed on your terms in the winter rules, waiting three weeks to have it done for free sucks I guess the flexibility is a good reason to rent but it’s such a scam
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Mar 8, 2020 02:10
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please knock Mom! posted:Getting broken heating fixed on your terms in the winter rules, waiting three weeks to have it done for free sucks This is the main reason I want to own. Being able to fix things on my schedule and to my liking, and not dealing with loving godawful landlords holy poo poo I'm freezing dammit. Unfortunately, the question of location is just not working out. I'd either be paying multiple millions of dollars, or commuting for almost and hour and a half each way on workdays.
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Mar 8, 2020 02:19
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Every aspect of home ownership costs so goddamn much it'll blow you away. Like 5x to 10x levels of higher expenses than you picture. It's cool though
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Mar 8, 2020 02:27
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Hoodwinker posted:Somebody else is gonna do a better job laying everything out but I'll just say that rent/buy is not a simple worse/better thing with regards to your financial picture. Short answer: rent is the most you have to pay and your mortgage is the least you have to pay. I say this as somebody who is closing on their first home in 3 days. The reasons about wanting to own a home because you want a thing that's yours to fix and tweak are good reasons and the same reasons I'm doing it. Owning a primary residence is a lifestyle decision, not an investment. I know you know this, but I'm just pointing it out. All this rent vs. buy calculator poo poo is almost inconsequential other than in very specific areas at specific times or if you're trying to figure out a break-even for being a short time owner. Your house is a horrible investment. Let's go back to a thread favorite: https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/
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Mar 8, 2020 02:30
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Pollyanna posted:Yeah, I getcha. The whole emerging = high risk, high reward thing is why I was wondering about doing total int, or going all in on emerging int. 70% VTSAX (Total Stock Market vs S&P 500) 20% VTIAX 10% VBTLX (Total Bond Market vs Balanced Equities)
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Mar 8, 2020 02:36
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dexter6 posted:Probably fine but why not: Not VTSAX because I already have money in VFIAX and I don't want to take it out and put it in another fund out of fear of losing the money somehow  I assume that's a bad idea?VBLAX was basically a coin flip, it could be VTBLX too.
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Mar 8, 2020 03:16
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Pollyanna posted:Not VTSAX because I already have money in VFIAX and I don't want to take it out and put it in another fund out of fear of losing the money somehow
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Mar 8, 2020 03:24
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dexter6 posted:i don’t understand what you mean by this Er...well, I've already put money into VFIAX, and if I take it out now, I'll have technically lost money since I moved it out after it dropped in value? I think I don't actually understand it myself. Also, I think I do actually prefer VBTLX more than the alternative. Sure, why not. Pollyanna fucked around with this message at 03:30 on Mar 8, 2020 |
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Mar 8, 2020 03:28
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hobbez posted:Start finding a realtor soon, hopefully buy by July/August... You should want to buy a house primarily because of lifestyle and preference. So as others have mentioned, if you like to tweak things, you like to put in the work, and you want to stay put, any gains on the house is really a bonus. I’m opposite: I HATE maintenance. Not good at it and while I can figure stuff out, it does not make me excited at all. I hate putting together IKEA furniture. So I will (probably) never own. So yeah , I think In your case, as long as the finances line up, go for it. Just always good to get that reminder as to why to really own a house.
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Mar 8, 2020 03:32
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Motronic posted:Owning a primary residence is a lifestyle decision, not an investment. I know you know this, but I'm just pointing it out. All this rent vs. buy calculator poo poo is almost inconsequential other than in very specific areas at specific times or if you're trying to figure out a break-even for being a short time owner.
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Mar 8, 2020 03:32
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Hoodwinker posted:I am closing in 3 days and I have the brainpower of a wet noodle. Goondolences. And enjoy the hell out of it. If this is what you want and can afford it's loving awesome. I love owning, even though I know that the math doesn't work. It doesn't kill me, but it's not optimal. What are we all saving and investing this money for if not to make our lives better?
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Mar 8, 2020 03:47
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Duckman2008 posted:You should want to buy a house primarily because of lifestyle and preference. I also hate maintenance but bought because of the stability, didn't want to move around renting with kids planned and all that. Half a dozen years later, no regrets, but still hate maintenance.
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Mar 8, 2020 04:41
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pmchem posted:Question about mutual funds vs. ETFs. Vanguard offers equivalent products in each form. However, they can have different expense ratios: Look at the Admiral fund equivalents. They have the same expense ratio as the ETFs. The ETFs have a disadvantage in that you can’t buy them a dollar at a time. You’re at the mercy of how many shares your desired investment divides into evenly. Aside from that and the higher buy in cost for the admiral funds, yeah they are equivalent.
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Mar 8, 2020 05:37
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I want to buy a house because doing so lets me borrow 200k at 1% while simultaneously getting me a tax break I don't want to buy a house because I'm a flighty 20-something
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Mar 8, 2020 05:54
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Alchenar posted:Casting ahead to the next 20-30 years I'd say US stock is the least risky in the world. Why do you say this? US stocks have gone from ~29% of total wealth in the 1980s to ~54% now. The S&P 500 has just had an improbably strong decade. In general, expected future returns are lower when prices are higher. Here’s Vanguard arguing that international should be 40-50% of US investor portfolio. https://www.vanguard.com/pdf/ISGGEB.pdf quote:In each market we examined, our analysis indicated that volatility was reduced most with an allocation to international equities of between 40% and 50%. While this observation may help investors determine the appropriate mix of domestic and international equities, volatility reduction is not the only factor to consider.
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Mar 8, 2020 05:59
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please knock Mom! posted:I want to buy a house because doing so lets me borrow 200k at 1% while simultaneously getting me a tax break Not an emptyquote
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Mar 8, 2020 06:02
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please knock Mom! posted:I want to buy a house because doing so lets me borrow 200k at 1% while simultaneously getting me a tax break I'm in the same position, in that I've had an apartment for the last 10 years but it's being resumed by the government for infrastructure so I'm gonna have a big wad of money again. However, I haven't actually made anything on that $270k I borrowed over the 10 years because real estate prices for not-houses did weird poo poo here, so whilst it was no more expensive than renting it also didn't really achieve anything either. Once my mortgage is gone, I'll have a tonne more free cash flow. So instead, I'm considering an equity loan to buy ETFs. The rate isn't quite as good as a home loan, but the bank secures it against the ETFs until I pay it off and it's a P+I loan so I can't be margin called. I think that it'll be a better option than buying a house when I'm not sure I want to live here forever either.
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Mar 8, 2020 06:11
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doingitwrong posted:Why do you say this? US stocks have gone from ~29% of total wealth in the 1980s to ~54% now. The S&P 500 has just had an improbably strong decade. In general, expected future returns are lower when prices are higher. Because the world is going to poo poo. We are not going to get a grip on Global Warming and the Global South is going to get absolutely smashed by it. China has a huge demographic, debt, and superpower confrontation problem coming up and an authoritarian government that will absolutely take your value. Europe is... okay but will continue to not solve the issue of monetary union but not fiscal union screwing with everyone's ability to generate growth. Meanwhile your democracy is firmly captured by interest groups that will ensure you will always do the thing that makes the stock market go up. The government can't stop bumps and corrections, but if you are investing now and want to come back to your money in 2050 then the US is the safest place to go. I'm not saying don't diversify at all, but the safest port of call will always be the US. Bear in mind that your linked article examines international equities in developed markets (ie. Europe and a bit of SE Asia). That's a pretty small slice of the world and each individual bit still had more volatility than the US.
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Mar 8, 2020 11:24
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doingitwrong posted:Look at the Admiral fund equivalents. They have the same expense ratio as the ETFs. This depends on your broker. There are brokers out there where you can buy fractional shares of ETF’s (or any other security).
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Mar 8, 2020 12:28
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doingitwrong posted:Look at the Admiral fund equivalents. They have the same expense ratio as the ETFs. You must not have looked at the examples in my post. VBTLX and VSIGX are Admiral funds.
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Mar 8, 2020 14:17
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doingitwrong posted:Why do you say this? US stocks have gone from ~29% of total wealth in the 1980s to ~54% now. The S&P 500 has just had an improbably strong decade. In general, expected future returns are lower when prices are higher. So do you account for your large US companies having huge international exposure? Take Microsoft which has about 40-50% of revenue from outside the US (from what I could find online). So it Microsoft is about 3-4% of your VTSAX holding does that mean you actually have 1.5% more international and less US?
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Mar 8, 2020 15:30
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spwrozek posted:So do you account for your large US companies having huge international exposure? Take Microsoft which has about 40-50% of revenue from outside the US (from what I could find online). So it Microsoft is about 3-4% of your VTSAX holding does that mean you actually have 1.5% more international and less US? The inverse is also true. Something like 35% of Nestle's revenue is from the US. See also Samsung etc.
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Mar 8, 2020 16:34
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What's the argument for leaving out non-US equities again? Are the funds more expensive? Rebalancing n+1 funds is too much work? Chasing performance? American exceptionalism? The "you already have some exposure via US companies doing business elsewhere" argument makes sense to me when your fund choices are cheap US index fund vs. poo poo non-US funds (too expensive, actively managed, etc.), so you go 100% cheap US index fund and call it close enough. But when you have a cheap diversified non-US (or total world) index fund available, why not buy it?
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Mar 8, 2020 21:55
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Pollyanna posted:Yeah, I getcha. The whole emerging = high risk, high reward thing is why I was wondering about doing total int, or going all in on emerging int. Those emerging markets have been emerging for a long time and international stocks have underperformed US stocks pretty much the entire time. International is definitely high risk but I don't think we've seen a high reward, at least in broad international indexes. The actual market weighting is about 60/40 domestic. I go 70/30 personally, just to get some diversification. Probably going to hurt my returns in the long run though.
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Mar 8, 2020 22:24
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pokeyman posted:What's the argument for leaving out non-US equities again? Are the funds more expensive? Rebalancing n+1 funds is too much work? Chasing performance? American exceptionalism? I was more curious about what my actual exposures are if I am 70/20/10 (US, INT, Bond) is it really that it area you actually something like 60/30/10? I am sure it is not terribly hard to figure out and someone may already have. I am not saying I have the answer either. My investments are tending to a 65/25/10 as my investments go in this year.
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Mar 8, 2020 22:38
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spwrozek posted:I was more curious about what my actual exposures are if I am 70/20/10 (US, INT, Bond) is it really that it area you actually something like 60/30/10? I am sure it is not terribly hard to figure out and someone may already have. I am not saying I have the answer either. My investments are tending to a 65/25/10 as my investments go in this year. Ah sorry, I didn't mean to argue, your post was just the one last push to finally get me to ask my question. Yours is a good question and I appreciate your explanation 
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Mar 9, 2020 00:13
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pokeyman posted:Ah sorry, I didn't mean to argue, your post was just the one last push to finally get me to ask my question. Yours is a good question and I appreciate your explanation All good man. I was just clarifying to see if anyone else knows. Overall I am pretty sure that as long as I keep putting money in I will be ok.
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Mar 9, 2020 00:33
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acidx posted:Those emerging markets have been emerging for a long time and international stocks have underperformed US stocks pretty much the entire time. International is definitely high risk but I don't think we've seen a high reward, at least in broad international indexes. The actual market weighting is about 60/40 domestic. I go 70/30 personally, just to get some diversification. Probably going to hurt my returns in the long run though. Yeah, I think basically the big historical example of international outperforming the U.S. was due to Japan's enormous bubble, and we all know how that turned out  Otherwise, the U.S. has tended to outperform and I fully expect it to continue to outperform. My target international holding is in the 20-25% range and I am guessing it will hurt me in the long run versus going all-U.S., but I hold it as a hedge against what happened in Japan happening here.
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Mar 9, 2020 01:38
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Kylaer posted:Otherwise, the U.S. has tended to outperform and I fully expect it to continue to outperform. Why?
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Mar 9, 2020 02:35
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Vanguard ETF weekend purchase / sales prices... am I correct in assuming that the price I'll pay or receive is the next business day's close NAV (Monday at this point)? And not what I see it priced at in my portfolio currently?
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Mar 9, 2020 03:08
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Inept posted:Why? I can't speak for the other guy, but America is basically the final boss that the entire world would have to band together to have a slim chance of overcoming in basically any form of conflict, especially economic ones. We currently have our fingers in effectively every single pie in the entire world, enjoy an absurd cultural hegemony, etc. Safe bet that US companies will be subjugating workers around the world for many, many, many years.
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Mar 9, 2020 04:09
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Opened a self-directed retirement account
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Mar 9, 2020 05:59
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fart store posted:I went ahead and applied for an elements financial helium savings which has a 2.1% rate for the first year. Residency Evil posted:I’d be interested as well. Hoodwinker posted:I'm interested in that as well, I meant to do this before, but kept putting it off. The recent tanking of equities, and the Fed's major emergency rate drops, reminded me of this, so it seemed like as good of a time as any to post this. The simplest way to describe it is a way to get 5-6% interest on up to $7,000 cash, FDIC insured. It involves using savings accounts across 7 banks (2 seperate credit unions, and 5 banks that are all managed by the same business and functionally identical). There are lots of high yield savings accounts out there, some offer lower rates, and some offer higher rates but with some extra requirements. These requirements are usually things like living in a certain geographic region, direct depositing X-hundred dollars every month, spending a certain amount of money over a certain amount of transactions, logging onto the website regularly, etc. But I want my savings accounts to be as worry-free and automated as possible. I want to be able to drop dead and not get hit with a bunch of fees, or even a loss of income. I want FDIC coverage, and I don't want to have to deal with any bullshit. These accounts are all that. All in all, this $7k in cash with earn about $360 per year, I've found. The first account we'll talk about is Digital Federal Credit Union, with their Primary Savings Account. Very simply, it offers 6.17%, paid monthly, on the first $1,000, and .25% on anything beyond that. Very simple, no-bullsiht account. The only, very tiny caveat is that while you can ACH money into the account for free, the only way to move funds from the account for free is to use the P2P People Pay feature, which functions similarly to Zelle. Any ACH withdrawals have a $5 transfer fee. The next accounts we'll talk about are the NetSpend five. These five are all managed buy the same business and are functionally identical. NetSpend, Ace Elite, Western Union, Brinks, and HEB. They're all pre-paid debit cards, with a HYSA attached, 5%, paid quarterly, on the first $1k each, .5% after that. I've gone ahead and shamelessly plugged my referral code into each of those links, if you join with ~my link~ we both get a bonus $20. So hey, another 2% return on your deposit. I think the code only works on your first account, though. When you make your account, be sure to go with the Pay As You Go payment plan, and not the monthly plan; doing this avoids any monthly fee, just be sure to never actually use the debit card for anything. Each account does require at least one transfer every 90 days to avoid a fee, but you can easily automate a $1 transfer every few weeks. My checking account has been passing the same $5 back-and-forth to these accounts every month; in on the first of the month, and out on the last. The last account I'll mention is Blue Federal Credit Union. Like the others, this account earns 5%, paid monthly, on the first $1k, however it requires a $5/month deposit into the account (ACH works fine), and will completely stop earning interest if the balance goes above $1k. To counter this, you could either keep less money in the account (~$900) and just withdraw from it maybe once a year, or you could do what I did and set up regular monthly withdrawals to automatically withdraw the $5 + interest every month and keep the balance just under $1k. The most interest I've seen it earn in a month is $4.19, so I set a regular monthly withdrawal of $4.20 (nice) to cover the earned interest portion, and let it go from there. And there you have it: $7,000 cash, FDIC insured, earning ~$360 annually. It's been a while since I made these accounts, but I believe some or all of them allow for credit card funding of them, and if I recall correctly, I believe that CC charge does earn rewards / cash-back, so make the most of that. There was another account that offered 4% on the first $2k, but that was recently lowered to 3%. Here's to hoping that these accounts can maintain their interest rates through this current nastiness, but I'm optimistic. literally this big fucked around with this message at 07:31 on Mar 9, 2020 |
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Mar 9, 2020 07:28
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| # ? May 16, 2024 21:29 |
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Apparently my wife’s 401k has a 3% fixed income option, and that’s the most popular investment option of her coworkers, which is why the fees on the other investments have to be so high. Hmmm.
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Mar 9, 2020 13:26
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